How Green Is Your Fund?

A report released this week makes it possible for investors and fund managers to compare the carbon footprints of leading U.S. mutual funds. Released by Trucost, an environmental data and research company, the report shows that the highest-carbon fund is 38 times more carbon intensive than the fund with the smallest carbon footprint.

The report, called “Carbon Counts USA” covers 75 of the country’s largest equity funds and 16 major sustainability/socially responsible investment (SRI) funds.

Overall, SRI funds have a smaller carbon footprint than core, growth, value, index, country/regional, equity income and sector funds. However, some of the largest SRI funds are among the most carbon-intensive analyzed.

The Trucost CEO says the findings provide information to fund managers and institutional investors who want to identify exposure to future liabilities to firms with high carbon emissions.

The carbon intensity of companies will influence which are the most exposed, with knock-off effects — the percentage of return that will be knocked off for having such exposure — on investment returns.